OFFICIAL WEBSITE OF THE GOVERNMENT OF THE RUSSIAN FEDERATION

Meeting of the Eurasian Intergovernmental Council

8 September 201512:00Grodno, Republic of Belarus

The agenda includes discussions on coordinating industrial policies within the EAEU, providing for macroeconomic and financial stability, creating a single market of services and developing relations with other countries and international organisations.

Mr Chairman, colleagues, I’d like to join those who spoke before me in
thanking the Republic of Belarus for organising this event at such an
interesting venue, as previously agreed. I’d like to congratulate Kyrgyzstan on
becoming a full-fledged member of our association. Now, we must move towards
creating a fully operational common market for goods and services, and continue
forming a legal framework for our union, focusing primarily on barriers, mutual
trade limitations and lack of transparency, which still exists. We plan to
adopt a new Customs Code in the coming months, to make sure it enters into
force in 2016. The agreements governing the procedure for signing international
treaties, and agreements on approaches to regulating currency relations and
financial markets activities, as well as numerous other documents, will have
been signed by the end of the year.

As the Prime Minister of Kyrgyzstan rightly said, we are in a fairly tough economic situation today as compared to when our union was created. The global economy
is in a tight spot. The situation cannot be fully rationalised and is quite
contradictory. The stock markets and the capital markets in a number of major
countries, such as China, as well as the European market, are volatile. In
addition to the above factors, the Russian economy is under sanctions pressure.
The future of the hydrocarbons market is uncertain. The volatility on the
financial and commodities markets is a key feature of the new economic reality,
and we must take this into account in developing our policies.

All this creates
additional risks for our respective economies, and we can see some of them
playing out in Russia already. Clearly, the process of economic recovery and
rebuilding investor confidence will take time. However, and this was also aptly
noted, that's a good starting point for consolidating our forces and combining
our efforts. Cooperation in the sphere of macroeconomic and monetary policies
has become particularly important for all of us. We have identified such a mechanism.

I would like to point out the importance of the first meeting of the
ministers of economy and finance, and central bank governors that took place in
Moscow on 25 August. The decision to hold this meeting was made at the previous
Intergovernmental Council meeting. I believe such meetings should be held on a
regular basis.

We reached an understanding that it is important to prevent so-called competitive
devaluation and avoid the temptation to take advantage of a weaker national
currency and capitalise on short-term foreign trade advantages. This is a
dangerous path to go down, and may cause imbalance in a number of industries.

The current agenda includes consideration of the draft Guidelines for
Industrial Cooperation. This document is overdue and includes a list of
priority economic activities and sensitive goods.

We will also need to decide on issues of international cooperation, such
as key guidelines for cooperation in 2015 and practical steps to build mutually
beneficial relations with the European Union.

A protocol on the accession of Kazakhstan to the World Trade
Organisation was signed in late July. We have just discussed this issue.
Following its ratification, our partners will begin to implement their
commitments. We have actively assisted our Kazakh partners in the talks and, of
course, welcome their completion.

Now, it’s imperative to put together measures to prevent possible
negative consequences for all our economies. This work is underway, and
everything must be done thoroughly.

The unified marking system is related to this issue. I’m pointing this
out to you, because we discussed it several times and agreed to run a pilot
project using fur products. In the future, the marking should also be used for
other products that are part of the sensitive products group.

However, things are moving more slowly than we expected, but this issue
is important for everyone. This mechanism is effective in dealing with the flow
of grey goods, and can also be instrumental in addressing a number of issues
that have arisen in connection with our partners joining international
organisations and our integration association. Finally, we need to agree on our
future meetings. We agreed to meet on a quarterly basis, and are willing to
look at our partners’ proposals. Thanks again for organising this meeting in Grodno.

News conference by Dmitry Medvedev

Transcript:

Dmitry Medvedev at a news conference

Question: Can you start with our relations
with Belarus, please? Would it be fair to say that growth in our
bilateral trade is mainly due to the banned products, which are known to have
entered Russia via Belarus? Has this problem been settled?

Dmitry Medvedev: We have good relations with
Belarus both in the framework of our integration association and on a bilateral
basis. We will continue the talks after this briefing.

Of course, our trade depends on
the economic situation and hence a number of specific factors. Bilateral trade
increased immediately after the establishment of the Customs Union and the
Eurasian Economic Union, but at present it has slumped due to economic
constriction and falling hydrocarbon prices. On the other hand, our trade has intensified
in terms of food deliveries. We highly value our Belarusian suppliers, who have
filled the gap in our food balance at this time. I’m referring to Belarusian
deliveries of dairy and meat products after we banned food imports from several
European and other countries. We are happy with our cooperation in this sphere,
which has helped us close the gap on the food market that was created by these
decisions.

As for all kinds of grey schemes
and smuggling, we have the same policy for all countries, including our
Belarusian partners: these schemes are inadmissible. We have been fighting and
will continue to fight them. We fully agree that the delivery of products that
have not been produced or processed in Belarus is a violation of the current
ban on imports, which is also referred to as counter-sanctions. We’ll continue
working to prevent these deliveries, using customs and other measures towards
this end.

Overall, the current situation is
good for creating joint ventures for growing or processing agricultural
products. We have met in the Grodno Region. Look at the quality of soil here. The
region is indeed the breadbasket of our Belarusian friends. It has always been
like this here. They have great harvests here. They told me the average harvest
is 5,000 kilogrammes or more per hectare, and some farms harvest 7,000 or more
kilogrammes. Russian farms can do this too: they harvest 5,000, 6,000 and even
7,000 kilogrammes per hectare on average. In light of this, I believe that
sharing technology and selection achievements is the cornerstone of our future
common market and food security.

Question: Mr Medvedev, a question from
Reuters. Gazprom has expressed its concern several times over
Ukraine’s not storing enough gas. Does this mean that Russia will resume gas
deliveries for Ukraine’s storage facilities soon?

Dmitry Medvedev: You know that our gas policy in
Ukraine has always been open. Even in the current complicated situation, when
our bilateral relations have deteriorated and are far from the best we’ve ever
had, we have nevertheless offered our Ukrainian partners the opportunity to
import our gas at reduced prices. You know that
the Russian Government adopted a resolution on the application of a special
preferential price to Ukraine, which stipulates discount duties so that
Ukrainian customers would buy gas at slightly over $247 per 1,000 cubic metres.
For a reason that is unclear to me, our Ukrainian partners rejected that
opportunity. At the same time, we know that it pays $20 or $30 more for the
reverse gas it buys from several European countries. Those who know this can
calculate the difference and see if it’s more profitable to buy Russian gas or
pay $20 or $30 more for reverse gas, which cost between $270 and $280 per 1,000
cubic metres in the third quarter, because we calculate our prices for three
month-periods.

We are not opposed to resuming
bilateral trade if that is what Ukrainian consumers want, but we are not going
to force the matter. If they want to shift the burden onto consumers, onto
their own citizens, they are free to do so and then answer to their people, who
should know how much they pay for the gas imported from friendly European
countries.

As for the future, we are willing
to discuss different cooperation scenarios. We always told our Ukrainian
partners that we can supply gas at a price comparable to the prices the other
countries pay, meaning EU countries located at a distance comparable to that of
Ukraine. In fact, the price I mentioned is very close to, or even lower than
the prices which some European countries pay. So, if they are ready, we can
continue these talks. At the same time, we’d like to remind them that winter is
coming, and that last winter passed relatively painlessly for the ruined
Ukrainian economy in terms of gas because it was warm and Ukraine didn’t need
much gas, but we don’t know what the coming winter will be like. We are also aware
that the amount of gas that has been pumped into Ukraine’s underground storage facilities
is approximately 25 percent lower than the country needs. The thing is that the
carry-over amount of gas should be about 18-19 billion cubic metres (bcm), whereas
Ukraine has only stored 14-15 bcm of gas, and not all of it can be used due to
the laws of physics and the methods used to retrieve gas from underground
facilities. In other words, they should store more gas, or they will have
problems this winter.

Question:
Mr
Medvedev, going back to Russian-Belarusian relations, I have a question about
an agreement on a Russian air base in Belarus, which is currently being
drafted. What is the proposed content of this agreement? Most importantly, when
will it be signed? Can similar agreements be signed with other countries,
members of the CIS or other associations involving Russia?

Dmitry
Medvedev: Let’s have a look atthe
history of these documents. It began in 2009, and I was directly involved in
it. At that time, we drafted and signed agreements dealing with the joint
protection of Russian and Belarusian borders and the joint air defence system.
In effect, the agreement you mentioned aims to implement them. It is nothing
out if the ordinary.

As far as deadlines for
drafting and signing these documents are concerned, we proceed from the
assumption that it should suit both the Belarusian side and us. The Government
has simply given a green light for the document in line with the current
procedure and has submitted it to the President. In terms of deploying similar
air bases, we already have them, as you know. This applies to Kyrgyzstan and
Armenia, and there is nothing surprising about it. In fact, we are ready to
sign such agreements with all countries with which Russia has allied relations,
be it member states of the Collective Security Treaty Organisation, or the CSTO
members that are also part of the Union State, like the Republic of Belarus.

Question:
Interfax
news agency. We have recently seen personnel reshuffles at several major state
companies. Can we say that the Government is dissatisfied with these companies’
management and spending in this difficult economic situation? Should we expect
any more reshuffles?

Dmitry
Medvedev: All decisions need time to mature. The decisions regarding the companies
you mentioned matured and were adopted for various reasons. But, of course, it
would be wrong to say that these decisions have to do with spending alone. At
the same time, I believe that virtually all companies with state capital have
the potential to cut back on their spending. Everyone should be streamlining
expenditures nowadays, including state agencies (I’m talking about federal
executive agencies) and companies with state capital. All of them have
substantial budgets, and these companies can hardly be called poor. On the
other hand, these companies assume tremendous social responsibility, including
responsibility for infrastructure monopolies, for executing the state’s
economic policy; responsibility to the public for the operation of transport,
the supply of gas, electricity and
heating to consumers. In effect, all of them are responsible for the economy.

Naturally, in the current situation, they
should reduce their spending somewhat, focus, so to say, and assess the
expenditures that can be streamlined. They have already done this, and this process
was not launched today. Nevertheless, they have the required potential for
reducing their expenditures further and, maybe, even their investment
programmes. The Government has repeatedly pointed this out. Bear in mind that
representatives of virtually all companies with state capital attend Government
meetings and take part in discussions, and this process will continue.
Naturally, our colleagues working for state companies should prepare for this.
I’ll try to get them together in the near future to discuss this issue once
again. There are also plans to analyse how meticulously budget funding is being
transferred to state companies or federal executive agencies because our
funding, currently being allocated for the implementation of state contracts and
state deliveries, should not merely be deposited at banks for a profit. We want
these assets to be spent completely in line with their designation. I’m
planning to hold several meetings on this subject quite soon.